Heritage Insurance Holdings, Inc.continues to seek $250 million or more in collateralized US named storm reinsurance from its  issuance, but the company is now aiming to capitalize on investor appetite and has lowered and tightened the price guidance for the notes on offer, this publication has learned.Heritage has been an active player in the catastrophe bond market since 2014, when it sponsored its first Citrus Re cat bond.This new Citrus Re Ltd.

Series 2026-1 catastrophe bond issuance will become the .Heritage made its return to the cat bond market in late February, We have been told that target remains the same, but like most catastrophe bond sponsors, Heritage is seeking to lower the pricing of the risk interest spread it will pay for the coverage.As we’ve explained previously, for its eleventh Citrus Re cat bond sponsorship, Heritage is targeting named storm reinsurance for its Heritage P&C Insurance Company, Narragansett Bay Insurance Company (NBIC) and Zephyr Insurance underwriting entities.

As a result, the coverage area is largely in the US northeast for Heritage P&C and Narragansett Bay, as well as the inclusion of Hawaii for Zephyr in just one of the tranches of notes.Citrus Re Ltd., Heritage’s special purpose insurer (SPI) in Bermuda, is currently offering two tranches of Series 2026-1 notes, that will be sold to investors and the proceeds used to collateralize reinsurance agreements for the ceding entities.The Citrus Re Series 2026-1 cat bond notes are targeted to provide Heritage and its subsidiaries with a multi-year source of US named storm reinsurance protection across the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island and Virginia, as well as Hawaii.

The reinsurance is structured on an indemnity trigger and per-occurrence basis, which will run across a three-year term from June 1st, 2026, to May 31st, 2029.The still $100 million tranche of Class A notes that Citrus Re is offering will cover named storm risks across the mentioned US states, but not Hawaii.They will attach at $290 million of losses after stated reinsurance, exhausting their reinsurance coverage at $450 million, giving them an initial attachment probability of 2.87%, and an initial expected loss of 2.5%.

These notes were first offered to cat bond investors with spread guidance in a range from 5.25% to 5.75%, but has now fallen to a spread of 5.25%, sources have told us.The still $150 million tranche of Class B tranche of notes will cover named storm risks across the mentioned US states and also Hawaii.They will also attach at $290 million of losses and exhaust their reinsurance coverage at $440 million, but with differences to the stated reinsurance inuring to them they are riskier, having an initial attachment probability of 3.6%, an initial expected loss of 3.32%.

These notes were first offered to cat bond investors with spread guidance in a range from 6.75% to 7.25%.That guidance has now been lowered to a revised range of 6.25% to 6.75%.Heritage Insurance Holdings, Inc.

appears to be prioritising price over size with its latest catastrophe bond sponsorship.However, the company could choose to upsize it after it has an indication of the final pricing, which can sometimes occur during the marketing phase of cat bonds.As a reminder, you can read all about this   catastrophe bond and every other cat bond issued in our extensive Artemis Deal Directory..

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